Global stocks were mixed on Friday as Iran and Israel exchanged air strikes and the US considered whether to join the conflict that has been raging for more than a week, damaging investor sentiment.
Both the S&P 500 and the Nasdaq composite finished lower, while the Dow Jones Industrial Average closed slightly higher.
S&P 500 fell by 0.2 per cent and Nasdaq Composite by 0.5 per cent when markets closed on Friday. Dow Jones Industrial Average was up by 0.08 per cent.
“The worsening global geopolitical weather keeps investors in a cautious mode, and will likely prevent them from taking too much risk,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
The news that “the US is giving itself two weeks to decide whether to intervene in Iran – which is slightly better than earlier reports suggesting they would go in this weekend – has somehow eased tensions,” she said.
US President Donald Trump said he will decide “in the next two weeks” whether his country will join Israel in attacking Iran, White House press secretary Karoline Leavitt said on Thursday.
The move eased concerns about an imminent attack on Iran by the US. However, if the Washington becomes involved in the conflict, it is expected to exacerbate the situation and hit investor sentiment.
Israel and Iran conflict, which began on June 13 following air strikes by Israel on Tehran has rattled investors, with global stocks plunging and oil prices rising on the first day of the war.
Gold prices also rose as investors rushed to safe-haven assets amid uncertainties in the market.
Analysts expect markets to remain volatile in the coming days.
“While the immediate prospect of a US intervention in Iran may have diminished, the fact this is reportedly a two-week hiatus means it will remain a live issue for the markets going into next week,” AFP reported, quoting Dan Coatsworth, an investment analyst at AJ Bell.
In Europe, London's FTSE 100 closed 0.2 per cent lower, while Paris' CAC 40 gained 0.5 per cent. Frankfurt's DAX was up 1.3 per cent.
In Asia, Hong Kong’s Hang Seng index edged 1.3 per cent higher and Shanghai’s composite was down 0.07 per cent, with Japan’s Nikkei down 0.2 per cent.
Investors are also keeping a close eye on the US Federal Reserve.
On Wednesday, the Fed kept interest rates unchanged and also forecast a slower pace of cuts as it expects higher inflation because of tariffs.
This week's decision was the fourth consecutive time the Fed has held rates steady after lowering them by 100 basis points to about 4.33 per cent last year.
However, a senior official at the Fed has suggested that the US central bank should consider cutting interest rates as soon as next month.
“We could do this as early as July,” Fed Governor Christopher Waller said on CNBC. “That would be my view, whether the committee would go along with it or not.”
